Finance

US banks made $28 billion in extra profits thanks to GOP tax bill

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Federally insured U.S. banks made more than $28 billion in additional profits in 2018 thanks to the Republican tax-cut law enacted at the start of the year, according to data released Thursday.

The Federal Deposit Insurance Corporation (FDIC) revealed that the nation’s 5,406 federally insured banks reeled in $236.7 billion in profits last year, according to the agency’s quarterly banking profile

Yearly profits increased increased $72. 4 billion from 2017, and the rise includes $28.8 billion more than banks would have kept under the previous tax regime. Bank profits in the fourth quarter of 2018 rose to $59 billion, an $8.1 billion increase from the same period in 2017.

The Republican tax-cut bill reduced the corporate income tax rate to 21 percent from 35 percent. The bill’s supporters said the corporate tax cut would fuel the U.S. economy, while Democrats panned it as a handout to wealthy elites.

U.S. banks would have made an estimated $207.9 billion in profits in the 2018 and $50.3 billion in the fourth quarter without the benefits of a corporate tax cut.

The sharp increase in profits was but one part of a strong year for U.S. banks, which have benefited from solid economic growth, consistent consumer spending and economic stimulus from the tax bill.

The percentage of unprofitable banks fell to 6.5 percent from 16.6 percent in 2017, and not one U.S. bank failed in 2018, the first year without a collapse since 2006.

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